In business accounting, financial transactions, such as sales, purchases, income, receipts and payments, are recorded and measured across defined periods of time, called accounting periods. Sometimes the periods are defined by outside authorities, such as financial institutions or government agencies. Others are set at the accountant's discretion; one can have as many or as few periods as necessary, so long as any legal or regulatory requirements are met. Any date range that defines a beginning date and an end date can be used for an accounting period. However, most businesses find it beneficial to mirror the periods used for tax purposes, which is typically a three month period (or quarter).
Some businesses can get by with a single, annual accounting period. These companies have relatively few transactions, predictable income, and few or no reporting responsibilities to outside entities such as loan officers or investors. If the only time a business needs to rely on financial statements is to figure out its annual tax obligations, it can safely use a year as its sole accounting period. Smaller companies may use a calendar based period, as thinking in terms of the calendar year is easier for non-accounting experts. The end of an accounting period can be a very busy time for a business' accounting department. For that reason, many companies pick their slowest season, e.g., the end of February, as the end of their annual accounting period, referred to as a fiscal year, that does not line up with the calendar year.
In order to accurately track financial obligations, such as estimated income taxes, most businesses run financial statements at least quarterly, i.e. at the end of every three-month period. Manufacturing and retail business often favor an even more granular, “weekly” accounting period that always starts on a specific day of the week. If a company is in a transitional period, such as the year a company opens or closes, or if the company is changing from using one category of accounting period to another, such as switching from a calendar year to a fiscal year, an interim, short-year, period may be used to cover the gap. Conceptually, virtually any period could be used as an accounting period so long as it is managed appropriately.